Values, Culture, and Corporate Success

Working with organizations around the world, I have noticed how common it is for executives to roll their eyes or yawn at the mention of the word "values." This is not because they are any less moral than the rest of us, but because, I believe, they consider words less important than deeds, and results more important than speeches. Overt statements about integrity, stewardship, or discipline, for example, look good on posters or in annual reports, but are less important than strategy or execution.

Is this the case? Are values less vital than the activities of the organization, and less important than the organization’s products, services, and performance? To understand better, let’s think about what values are, how they should be defined, and how they impact the organization itself.

Culture and Yogurt

In elementary school science class, we learn that culture is the stuff that makes yogurt grow. Later, in social science, we learn that there’s a connection between cultures and countries, nations, and tribes. Our view of corporate culture is derived from the way anthropologists use the term.

Culture is broadly defined as the "knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired... as a member of society." (Tylor 1958) Further definitions emphasize the fact that culture (not unlike yogurt) develops over time, and is a "system of inherited conceptions" attitudes and symbols that get perpetuated historically. (Geertz 1973: 89).

As a concept, culture has been important since the late 1700s, when we saw the rise of nationalism. A nation state – as opposed to an empire like the Austro-Hungarian Empire – was defined by geographical boundaries, language and religion. A people (or a cultural group), on the other hand, was marked by language and religion, and might not control its own state or have a contiguous homeland.

Extending these points as metaphors, a corporation has a culture when it exists separate from other organizations, and when it has its own "language" (or way of communicating) and "religion" (or beliefs about right and wrong). It also has attitudes, symbols, and views or concepts that get passed down from one generation of employees and leaders to the next.

Values, or norms of behaviors and beliefs, are the basis of culture. Those behavioral norms and beliefs are established by the founders of the organization, and they rarely if ever undergo significant change even over a long period of time. I define corporate values as:

Strong held beliefs that are

Emotional charged, and

Highly resistant to change

That’s the definition. Now for the problem.

Overt or Covert

Often, when I work with a corporation for an extended period of time, I come across a difficult challenge. It soon becomes apparent that the organization has two sets of values.

One of those value sets is public or formal. I don’t have to look hard to determine them, I only need to read the communications materials or the posters and annual reports, or view the job interview guidelines or listen to a big CEO speech. In such formats, the organization’s values are well articulated and clearly expressed.

Employees see them too. They just don’t know what they mean.

Inevitably, I discover that those overtor above-groundvalues aren’t the real values of the organization at all. No matter what the leadership or the Human Resources group would prefer, a second, covert or below-ground set of values actually has more meaning and impact in the organization.

Employees don’t always talk about these values in Hallmark-like terms; but they sure operate as though they’re written on every poster and business card. Why? Because those values actually define what the organization cares about, how it evaluates success, and how it promotes or reprimands.

Covert values are the behaviors, norms, and practices that leaders impress upon employees through what they do rather than what they say. They are the beliefs and actions that employees pass on to each other by acknowledging what’s acceptable versus what won’t fly.

In some rare and happy organizations, overt and covert values are one and the same. They may not be articulated with the same exact words, but the gist and the impact are identical. Ideally, even the language should be the same. When overt and covert values are the same, everyone, from the CEO to the store clerk shares a common understanding of right and wrong, and how to act or make a decision in whatever circumstance. The same principled understanding can be used to evaluate the strategic plan or the way a customer’s complaints get handled. The answers, in each situation, are clear as day. Right is right, and wrong is wrong, no matter how a decision or an action will affect short-term results.

Making Them Real

A book could be written on how we make values real – and, in fact, I’ve written one. But in broad strokes there are a few simple principles that must be followed.

Values must reflect the current reality of the workplace, in the terms that people use to describe their own work. For this reason, I consider behavioral statements as the ideal way to capture and articulate a value.

Values are promoted by hiring people who demonstrate them, and by promoting and rewarding people who live them in all circumstances, regardless of the results. There is no easier way to make values covert than by hiring, rewarding or promoting people who do something contrary to the values.

Values should be integrated into all aspects of human resources management. But they should also be used as a business tool when setting and modifying the strategic business plan. The correctness of the business plan needs to be measured for alignment with the values not vise versa.

The Power of One

The best and most effective leaders understand the power of values that are real to the organization, well articulated, and used as the basis for all decisions and actions. They know that it is impossible to graft a set of nice-sounding words onto the organization when those words contradict or fail to express the actual values of the organization.

As organizations grow in size, complexity and geographical span, values are more important than ever. It is impossible, and undesirable, to micro-manage every customer interaction, every performance review, every corporate softball game. But if the values of the organization are commonly understood, and based in the cultural sense of right and wrong, then there is no need to oversee every activity. Employees will supervise themselves as well as their colleagues, reports, and – most importantly – their bosses and leaders. They will speak up when values are violated. They will celebrate when values lead to success.

It is only when overt and covert values are split that you will hear people say, "Values don’t matter." Leaders who think they can change a culture, establish a strategic plan or a set of guidelines that don’t match the culture, or celebrate some values as being more core or essential than others will soon realize that the culture is bigger and more resilient than them.

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